Councillors have agreed to cut the amount a developer had to contribute towards area improvements in Newcastle - after it said it could not afford it.

Abode Residencies was given the green light to develop the former Bristol Street Motors site on London Road, Newcastle, in 2017.

It was given planning permission for 499 student flats, and as part of the agreement had to pay funds towards local improvements – known as a Section 106 agreement.

This was to go towards public open space and public realm works, including the upgrading of subways that pass under the Grosvenor roundabout. Smaller sums were requested for projects including cycle network improvements and bus shelter upgrades.

But on the Borough Council’s planning committee was asked to reduce the contribution total to £300,000 – including £207,455 towards public open space and public realm enhancement – after the developer said paying the full £1.3m would make the student apartment scheme “financially unviable”.

A report to the committee said: “It is accepted, following the obtaining of independent financial advice, that a policy compliant scheme is not viable and that the scheme can only sustain reduced contributions but the benefits of the development are considered to outweigh the harm caused by the additional unaddressed demand created by the development on the public open space and public realm in the area.”

Councillor Simon Tagg proposed the request be refused, but his motion was defeated by just one vote.

Councillor John Williams asked: “Do we ask for too much in the first place?”